FINRA Issues Warning Regarding High-Yield CDs

Posted on June 12th, 2014 at 9:00 AM

From the Desk of Jim Eccleston at Eccleston Law Offices:

A new investor alert, “High-Yield CDs: Red Flags That Signal a Scam,” was issued by FINRA to warn investors to be wary of CD offerings.

These “red flags” include:

  • interest rates that are significantly higher than average;
  • emails with addresses that are not originated and sent by the financial institution that is cited in the promotion;
  • emails that contain misspellings or grammatical errors;
  • promotions that claim to be from a U.S. financial institution that has aligned with an international bank;
  • promotions that claim to be for a "limited time only"; and
  • promotions that claim to be directed at "best customers" and that require extremely high minimum investments (for example, $100,000).

 For example, in a recent suspected email fraud, a large U.S. bank promoted a CD offered by an international banking partner. While most CDs at U.S. banks and credit unions were offering just over 1 percent for a comparable term, the pitch in this fraud provided a CD with a 15 percent yield, and contained instructions on how to wire funds. 

According to Gerri Walsh, FINRA's Senior Vice President for Investor Education: "Savers continue to face near-historic low yields on traditional bank products. Fraudsters attempt to take advantage of investor desire for higher yields by luring them into potentially fraudulent CDs that promise both safety and double-digit returns."

The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston

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